Maria is purchasing a home in Providence, Rhode Island. Her mortgage document includes a power-of-sale clause. If she later defaults on her loan, which statement best describes the foreclosure process available to her lender?
Correct Answer
D) The lender may use non-judicial foreclosure because the mortgage contains a power-of-sale clause
Rhode Island is a hybrid foreclosure state. When a mortgage document contains a power-of-sale clause, the lender may proceed with non-judicial (power-of-sale) foreclosure without obtaining a court order. This is a key Rhode Island-specific nuance: the type of foreclosure available depends on the specific language in the mortgage document.
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Related Topics & Key Terms
Key Terms:
Related Concepts
In the context of foreclosure, a deed transfers ownership of the foreclosed property to the new owner, typically the buyer at a foreclosure sale.
Discount points are upfront fees paid to a lender at closing to reduce (buy down) the interest rate on a mortgage loan. One point equals 1% of the loan amount and typically reduces the rate by approximately 0.25%.
An FHA loan is a mortgage insured by the Federal Housing Administration that allows lower down payments and credit scores than conventional loans. It is designed to help first-time homebuyers and borrowers with limited resources.
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